Hong Kong residential – the XRL opening effectSeptember 17, 2018 / By
After eight years of construction, the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) will finally commence operation later this month, on the 23rd of September. With trains travelling at speeds of up to 200km per hour, the XRL will shorten the commute time between West Kowloon station in Hong Kong and the Futian CBD in Shenzhen to a mere 14 minutes while travelling to Guangzhou will take just 47 minutes. Passengers can also interchange to express railway in China to reach 44 cities as far as Beijing in 9 hours.
The new XRL terminus is within a short walk to Kowloon Station and Austin Station, which provide connections to the airport and city’s northern area, solidifying the area as a major transportation hub and benefit the residential market in the surrounding area.
Our in-house data shows that capital values in the area have increased by 63% since construction of the XRL started in 2010, stronger than the 53% recorded for Hong Kong as a whole over the same period.
Figure 1: Influence of XRL construction on house prices in surrounding area
Source: EPRC, JLL
If history repeats, then there still should be room for residential prices around the future XRL terminus to climb further. When plans for new rail lines are announced, capital values in areas that will benefit from the new infrastructure will outperform the market and then record a bump once operations commence. This was most recently seen with the Kwun Tong line extension where capital values of residential properties in Whampoa have outperformed the overall market since the new line was gazette in 2009. A bump was then consequently recorded after completion with capital values in Whampoa rising 33% compared with 28% in the overall market.
Figure 2: New rail line opening effect
Source: EPRC, JLL
Being the new transportation hub in Hong Kong, we see huge potential for residential demand to go up in West Kowloon, especially for those frequently travel between Hong Kong and the mainland. Even with the residential property market starting to lose some growth momentum, we expect capital values of residential properties in West Kowloon to receive a bump in the coming months as train services along the XRL commence.
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